PayPal Holdings (PYPL) Beat Expectations, Is The Stock Still Undervalued?
PayPal Holdings (PYPL) has just reported second quarter 2026 results, with higher sales and lower net income compared with a year ago. The update gives investors fresh numbers to assess the stock.
See our latest analysis for PayPal Holdings.
PayPal Holdings’ recent earnings beat and higher full year guidance sit against a mixed price picture. A 29.82% 1 month share price return contrasts with a 14.01% decline in 1 year total shareholder return, suggesting short term momentum but a weaker longer term record.
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PayPal Holdings has a large global payments footprint and recently reported earnings that beat expectations, yet the stock has surged in the past month while longer-term returns remain weak. Does that rebound still leave room based on valuation, or not?
Most Popular Narrative: 12% Undervalued
The most followed narrative values PayPal Holdings at $65 per share compared with the latest close at $57.21, which implies meaningful upside in that framework.
The market prices PayPal (around 8x earnings) as a structurally dying payments company. The numbers show something else: approximately $6.8B in annual free cash flow, a net-cash balance sheet (around $13.5B cash vs. approximately $11.6B debt), about 440M active accounts, and total payment volume of roughly $464B per quarter, still growing around 11%. My core thesis is that PayPal does not need to grow to re-rate; mere stabilization is enough.
Want to see how this narrative gets from cash flows and margins to that higher fair value? The key levers sit in earnings resilience, buybacks, and where the future P/E settles.
Result: Fair Value of $65 (UNDERVALUED)
Have a read of the narrative in full and understand what's behind the forecasts.
However, you still need to watch for erosion in PayPal Holdings’ core Branded Checkout metrics and any further pressure on transaction margins that would weaken this cash flow story.
Find out about the key risks to this PayPal Holdings narrative.
Next Steps
With sentiment on PayPal Holdings split between concern and optimism, this is a good time to review the full picture yourself, including the 3 key rewards and 1 important warning sign
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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